4-2 Case Study: Cost Cutting At Vent care

Supplemental Case

Chapter 10: Cutting Costs at VentaCare

VentaCare Nursing Homes provides private care for over 500 residents in three different

locations. The company employs 250 staff members with a variety of responsibilities including

RN’s, nursing assistants, kitchen staff, custodians and administrators. VentaCare has a

reputation of providing superior care and has a waiting list for residents ready to move in to their

homes. Further, the company enjoys a relatively low employee turnover rate. However, some

recent cuts in federal funding have created some financial difficulties for the company.

VentaCare has cut costs in all aspects of their operations, but the company still has not

accounted entirely for their expected budget shortfall and must now examine personnel costs.

Due to state requirements for minimum levels of staff to residents, cutting staff is not an option.

They have decided to temporarily freeze salaries, but this will still not create enough savings for

the company. Allison Wiggan, the Director of Human Resources, has been asked to examine the

company benefit program for cost cutting options.

The company offers a fairly generous benefits program, which is quite costly for the

company. In addition to a health insurance plan, the company provides both short-term and

long-term disability insurance and life insurance for which the company pays the full premium.

The company provides paid time off including eight paid holidays, an average of ten vacation

days and five sick days each year. As a retirement benefit, the company provides a 401(k) plan

where they match the first 3% of the employee’s contributions. The company also offers tuition

reimbursement for employees pursing any advanced degree. To promote employee wellness,

they offer a variety of programs such a monthly lunch to discuss health concerns. And finally,

they offer a full-service Employee Assistance Program.

 

 

 

Changing or eliminating any of these benefits is going to be a challenge. Part of the

reason VentaCare has had such success is that they are able to retain talented and dedicated staff

members. While the company’s pay rates are in line with their competitors, their benefits

program is clearly more generous. Allison is concerned that making cuts to the program could

cause employee turnover or create challenges in future recruiting efforts.